Moody's Investors Service stripped France of its prized AAA rating on Monday, citing its limited prospects for growth and exposure to the crisis that has forced several countries into bailouts.

In Tuesday afternoon trading, Britain's FTSE 100 fell 0.3 percent to 5,721.40, while France's CAC dropped the same rate to 3,430.22. Only Germany's DAX found its footing, rising 02 percent to 7,137.67.

The euro was flat at $1.2816.

Investors are also nervously awaiting another meeting of finance ministers on Greece later in the day. Greece's next batch of rescue loans have been hanging in the balance for weeks, while its creditors decide whether the country has implemented the required reforms. Athens depends on the money to pays it day-to-day bills, and it could run out of cash if it doesn't get the €31.5 billion ($40 billion) loan payment soon.

The back-and-forth over this tranche of loans — it's still unclear if the ministers will decide to give Greece the money — has exacerbated concerns that the currency union is too dysfunctional to solve its problems. Until they move out of crisis mode, the 17 European Union countries that use the euro can't hope to restart growth.

Moody's cited France's exposure to the crisis — and its own struggles with implementing reforms to restore the competitiveness of its economy — in its decision to downgrade its credit rating.

"After both European and US markets had started the week in such strongly positive mood, the overnight news that Moody's has downgraded French sovereign debt from Aaa to Aa1 has put an end to that," said Alastair McCaig, a market analyst with IG.

Later in the day, the focus will shift to the U.S., where Federal Reserve Chairman Ben Bernanke will give a speech on the state of the world's largest economy. Investors have been hopeful that President Barack Obama and Congress will reach a budget deal before the end of the year to avert tax hikes and spending cuts that could throw the U.S. into recession.

Wall Street also appeared headed for a subdued opening with Dow Jones industrial futures up 0.02 percent at 12,741 and the broader S&P 500 futures up 0.07 percent at 1,383.